Bank of East Asia n Ong Kim Chuan

GROUP: 8COMPANY LAW

CASE 1: THE BANK OF EAST ASIA LTD SINGAPORE BRANCH V AXIS INCORPORATION BHDCASE 2: ONG KIM CHUAN & ANOR V LEMBAGA KUMPULAN SIMPANAN PEKERJA

PREPARED FOR: Dr. NUARRUAL HILAL MD DAHLAN

PREPARED BY:

NARENTHEREN A/L KALIAPPEN 803949 OHOUD YOUSEF S AL-KHATHRAN 803965MOHD FISOL BIN OSMAN 808369

ETHICS ,LAW &CORPORATE SOCIAL RESPONSIBILITYGMUL5063

CASE 1

The Bank of East Asia Ltd Singapore Branch

VAxis Incorporation Bhd (No 2)

COURT : HIGH COURT (JOHOR BAHRU)

JUDGE : VERNON ONG

FACTSPetitioner : The Bank of East Asia Ltd, Singapore BranchRespondent : Axis Incorporation Berhad

1- The petitioner presented a winding up petition against the respondent under section 218 of the Companies Act 1965 (‘the Act’) on the ground that the respondent was unable to pay its debts. By a notice of motion (encl 29), the respondent is applying to strike out the petition.

2- The respondent is a public company listed in Bursa Malaysia with a paid up

capital of RM152, 906,791. On 21 November 2008, the petitioner

obtained a judgment in default of appearance against the respondent for

US$2,422,277.23 together with interest and costs in the High Court in the Republic of Singapore. The foreign

judgment was not registered in Malaysia.

On 14 April 2009, the respondent obtained a restraining order under s 176(10) and (10A) of the Act at the KL High Court to restrain all further proceedings against the respondent for a period of nine months.

ISSUES1- Whether winding up proceedings could be instituted based on Singaporean judgment not registered in Malaysia? 2-Whether winding up proceedings an execution proceedings or an action to recover judgment sum?3- Whether the application to strike out petition by respondent can be considered as abuse of process of court?

The Arguments By The Petitioner

1- The petitioner had obtained a judgment in default of appearance against the respondent, for US$2,422,273.23 together with interest and costs in the High Court of Singapore.

2-The petitioner presented a winding up petition against the respondent

which under s 218 of the Companies Act 1965 on the ground that the

respondent was unable to pay its debts as and when they fall due. The petitioner also obtained an ex parte

order to appoint a provisional liquidator.

3- The petitioner argued that the reciprocal enforcement should be applied for this act and the decision that is taken by Malaysian court should not be different from the Singaporean one. There is no need to register the foreign judgment in Malaysia.

The Arguments By The Respondent

1- The respondent thereafter applied by way of this notice of motion to

strike out the petition under O 18 r 19(1)(d) of the Rules of the High Court

1980 (‘the RHC’) as an abuse of process of the court.

2- The respondent’s submission that the Reciprocal Enforcement of Judgments

Act 1958 (‘REJA’) applied to Singapore because it is a reciprocating country

and that under s 7 of the REJA, which applied to all proceedings for the

recovery of a sum payable under a foreign judgment, the winding up

proceedings could not be instituted against the respondent without first registering the foreign judgment in

Malaysia.

3- The respondent further submitted that the court had struck out the ex

parte order on the same grounds, i.e. that the petitioner had failed to

register the foreign judgment under REJA.

Judgments Of The Judges On The Arguments Of The

Petitioner And Respondent1- In the issue, whether the application to strike out petition by respondent can

be considered as abuse of process of court?. The court without doubt has

come to a conclusion that the court has the inherent jurisdiction to strike out a

petition for any abuse of its process. This is based on the case of Jurupakat

Sdn Bhd v Kumpulan Good Earth (1973) Sdn Bhd [1988].

2- The court has also made judgment to strike out the petition with costs on

winding up proceeding granted earlier by Singapore high court to the petitioner. The decision made by learned judge was based

on several reasons and previous cases:

-Dato’ Ibrahim bin Hj Ismail & Anor v Onstream Marine Sdn Bhd & Ors [1998] 4

MLJ 86; [1998] 4 CLJ 526. Where the petition was strike out by the judge.

- There is no evidence to show that the has petitioner taken any steps or made any attempts whatsoever to register the Singaporean judgment in Malaysia.

-In the present case, the right to take proceedings on the Singaporean judgment will only accrue to the petitioner upon the

registration of the said judgment in Malaysia under the REJA. The registration

of the Singaporean judgment is a fundamental prerequisite without which,

the petitioner is devoid of the requisite right to take any proceedings on the

judgment.

-In the case of In re a Judgment Debtor (No 2176 of 1938) [1939] 1 Ch601, the Court of Appeal considered the import of s 6 and sub-s (2) of s 2 of the Foreign Judgments (Reciprocal Enforcement) Act 1933. Section 6 provides: ‘No proceedings for the recovery of a sum payable under a foreign judgment, being a judgment to which this part of this Act applies, other than proceedings by way of registration of the judgment, shall be entertained by any court in the United Kingdom.

- In order for such proceedings to be validly instituted, the Singaporean judgment must be registered in Malaysia. The winding up petition fell far short of the mandatory requirements of the REJA in that the petitioner did not even obtain an order for leave to register the Singaporean judgment. In the circumstances, the winding up petition is premature and bad in law. A winding up petition which is bad in law is also an abuse of process and it cannot be entertained.

COMMENT

In my point of view, I totally agree with the court judgment. Because the winding up petition fell far short of the mandatory requirements of the REJA. The petitioner did not register the judgment in Malaysia.

Case 2 Ong Kim Chuan & Anor

v Lembaga Kumpulan Wang

Simpanan Pekerja

Court : Court of Appeal (Putrajaya)

Judge : Ramly Ali

FACTS

• Appellants : Ong Kim Chuan & Anor• Plaintiff : Lembaga Kumpulan Wang

Simpanan Pekerja• The appellants appeal against the

decision of the learned High Court in dismissing the appellants appeal against the decision of sessions court allowing the plaintiff's claim.

• The first defendant, Haleywood Industries Sdn Bhd had failed to make payment of EPF contribution of its employees for the period of June 2000 to March 2002 and October 2000 and May 2002 for a sum of RM 180,624.

• The second and third defendants (appellants) were directors of the first defendant company during the relevant period. The first defendant was wound up on 18 November 2002.

ISSUES

1. Whether directors personally liable when company failed to pay EPF contributions?

2. Whether winding up of company absolved directors from liablity under s 46 of EPF act?

3. Whether claim against directors and not against company is fraudulent preference?

The Arguments By The Plaintiff

1-The plaintiff argue that the company and former directors who where in those periods have not paid the EPF to their employees, and therefore the plaintiff’s claim that the company and former directors should be jointly and severally liable for the employee provident funds under s 46 of the EPF Act.

2-The plaintiff claimed for the said sum of RM180, 624 initially from all

the three defendants. The plaintiff intention to withdraw its claim against

the first defendant after the first defendant (company wound up).

The Arguments By The Appellant / Defendant

1-The second and third defendants (‘the appellants’) who were directors

have lost their status or locus as directors when the first defendant

company was been wound up under s 218 of the Companies Act 1965.

2-Further it was also contended by the appellants that under s 292(1) of the Companies Act 1965 in winding up of a company, any payment due under the Provident Fund or Employees Superannuation can be realized by filing the proof of debt with the official receiver.

3-The appellants contended that s 46 of the Act is not comprehensive to cover a situation where the company has been liquidated or wound up, and that the position of the directors’ liability in such an event is not expressly provided for.

The appellants also argued that the provision of s 46 of the Employee Provident Fund Act 1991 applies only in respect of the company which is still in operation.

4-The appellants stressed that the plaintiff’s claim under s 46 of the EPF Act for the said amount against the appellants tantamountto fraudulent preference under the Companies Act 1965 and thus unenforceable in law.

Judgments Of The Judges On The Arguments Of The

Plaintiff And Appellants

• It is not in dispute that the first defendant ,Haleywood Industries was at all material times and it is also not in dispute that the first defendant had failed to pay contribution to the EPF. But during that period both the appellants were directors of the first defendant.

• According to s 65 (1) of EPF act , all contributions recoverable by EPF can be recovered as civil debt.

• The plaintiff took action against the appellants based on s 46 of EPF act which provides any remaining unpaid of company , the directors of such company during that releven period were liable to be paid.

• Thus under s 46 it is clear that directors of a company shall together with the company be jointly and severally liable for the unpaid contribution. These provision are to be enforceable ‘ notwithstanding anything to the contrary in any other written law’.

• First the plaintiff claim against first defendant but later plaintiff withdrew its claim after the first defendant wound up. During that periods the first defendant company still in operation and both appellants were directors. So the directorship ceased long after the first defendant company wound up on 18 November 2002 does not in any way absolve the appellants from the liability imposed by s 46.

• The case of Salomon vs Salomon & Co which reliance by appellants also does not help them. The plaintiff claimed againts both the appellants on their personal liabilities under s 46 EPF act not claim against the first defendant so the issue of fraudulent under the Companies Act 1965 does not arise.

• So based on above considerations the court found that appellants arguments were totally baseless and without merit. Therefore the court dismissed with costs of RM 3000 to be paid by appellants to the plaintiff (respondant).

COMMENT

• In my point of view, I would totally agree that the appellants are personally liable for the unpaid EPF contributions on that relevant period. Because the both appellants were directors of the the first defendant during the relevant period which the said contributions were liable to be paid.

Thank you